Q+A With the Director-General of IRENA Adnan Amin

Adnan Amin is director-general of the International Renewable Energy Agency

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Adnan Z. Amin was elected Director-General of the International Renewable Energy Agency, or IRENA, in April 2011 and has helped the agency promote the adoption and use of sustainable renewable energy worldwide. The Abu Dhabi headquartered IRENA was set up in January 2009 and to date, 123 nations as well as the European Union have joined the agency. Here, Mr. Amin tells The Wall Street Journal why he thinks renewable investments will rebound in the coming year and why Gulf states need renewables in their energy mix.

WSJ: Are you concerned that investments in renewable energy have dropped in the last couple of years?

Mr. Amin: I’m not worried about that. Everything goes through different phases and what we had over the last years is a phenomenal growth in renewables. The highest capacity addition in energy in the last years has been in renewable energy, but what this has resulted in is a huge overcapacity in the system. It resulted in long term subsidies or incentives for renewable energy that created a long term profile while the costs of technology were falling. But the fact of the matter is that although the financial value of investments in renewable energy has dropped in the last two years, breaking a cycle of five or six years of growth, what we are seeing is that capacity additions coming from renewables continue to grow. I think about 110 gigawatts of capacity was added last year which was higher than the year before. So the projection is still upwards and optimistic and we think there will be a shake out in the industry.

WSJ: So when do you expect to see a rebound in investments?

Mr. Amin: I think in the coming year we will see growth in investments because up until now a lot of the investments have been in developed countries, and these countries now have a very stable growth in demand, while the demand center is really in the emerging and developing countries where you see sustained economic growth and huge decisions to come on power generation. Renewable energy has become an economically viable model for these countries so investments will pick up there.

WSJ: Can the shale-Gas boom complement renewables growth?

Mr. Amin: one of the issues in renewables like wind and solar is intermittency. That intermittency has always been a little bit of a problem for how you integrate that energy into the grid. What gas does is that gas plants have the capacity to power up and down very quickly, unlike nuclear and coal plants. So if you have large shares of renewables with intermittency coming into the system where you have gas power then you can balance this intermittency very well. So we think the combination of shale gas and renewables holds a great promise in the future for a much cleaner energy transition.

WSJ: In terms of costs, would renewables be cheaper for Middle East producers compared with fossil fuels?

Mr. Amin: That depends on the costs in the market for fossil fuel. What we see in the region of the Gulf Corporation Council, or GCC, is that fossil fuels for consumptions are heavily subsidized. But if you look at it at the full cost range and given the richness of the solar resources in the GCC region, it can be cheaper. We heard today that in Saudi Arabia they are beginning to generate solar power at rates less than conventional generation. So the economic equation for solar and wind in the region is coming to a point where it is economically competitive to produce renewables than conventional power generation, especially in Saudi Arabia.

WSJ: Do you think Saudi Arabia will be able to meet its target of producing 54 gigawatts of capacity by 2032, which is about 30% of their energy mix?

Mr. Amin: I think they have to because the growth in domestic energy demand is growing so fast, especially in electricity, that in 25 year time Saudi Arabia may become a net energy importer. So they have to find a solution to that.

WSJ: Where can solar and wind power be most effective in the region?

Mr. Amin: The extraordinary thing about the Middle East and North Africa region is that almost without exception across the GCC and MENA region there are extremely rich resources of solar energy. Solar generation is viable in any country in the GCC. Wind is much more distributed, but there are areas in the MENA region where it is already quite competitive like Morocco.

WSJ: How much should nations add in terms of renewables capacity a year through 2030, to meet the United Nations goal?

Mr. Amin: Well, the U.N. goal is doubling renewable capacity by 2030. Our analysis of 28 countries that represent 75% of global energy use is that if we have the right policy framework and we choose the right technology and if we have the right regulatory regimes to create the market for renewables we can double the capacity with cost neutrality. Overall, the doubling target is more than realistic. The target is about 30% of global energy mix, but our projections, factoring in technology and efficiency, takes us to 36% of the global energy mix.

WSJ: How much is your current budget? and is that enough to promote sustainable energy?

Mr. Amin: The amazing thing about our budget is that we are a brand new organization in a way. We are three-years old and we began as a startup with a limited budget. But what has happened is that because of the demand of the services we are offering we saw a 20% increase in our budget annually since we started. So for the year 2014-15 budget we will have a $60 million compared to $45 million. Of course we could do more work with more money but we could do a tremendous amount of work with this budget.